IT WAS the sort of week that makes pessimists rejoice. Wherever one looked in eastern Europe and the former Soviet Union, there appeared to be chaos, conflict or instability.

The most glaring example was Russia, where President Boris Yeltsin threw a ring of armour around the parliament building that houses his rival for power, Alexander Rutskoi, and a clutch of rebellious legislators. Even if civil war is averted, ominous developments are occurring in Siberia and other distant parts of Russia, where Mr Yeltsin's dissolution of parliament has stimulated demands for regional autonomy.

In Georgia, Russian-supported Abkhazian secessionists captured the Black Sea port of Sukhumi, drove tens of thousands of people from their homes and sent the Georgian leader, Eduard Shevardnadze, into ignominious flight. Less than three years after declaring independence from Moscow, the Georgian state has virtually ceased to exist.

In Bosnia-Herzegovina, Muslim leaders rejected a plan to divide the republic into three ethnically based mini- states unless they secured more land. The Bosnian Croat leader, Mate Boban, called for a general mobilisation of his community's forces, while Bosnian Serb commanders threatened to withdraw territorial concessions they had previously offered the Muslims. The Muslim position was weakened by a revolt in the Bihac region of northwestern Bosnia, where local Muslims declared autonomy from Sarajevo. Yesterday rebels fired on supporters of President Alija Izetbegovic, wounding four people.

Elsewhere, President Leonid Kravchuk of Ukraine assumed personal control of the government in an effort to restore order to a country enfeebled by hyper-inflation, regional separatisms and disputes with Russia. Poland remained without a government, after an election that saw former Communists win the largest number of seats in parliament. Romania was in turmoil after hundreds of villagers in Mures County lynched three Gypsies and torched Gypsy houses. According to the Romanian news agency Rompres, the villagers were retaliating for the murder of a local man by one of the Gypsies.

From the industrial ruins of Slovakia to the battlefields of former Yugoslavia, from the political paralysis of Albania to the anarchy of the former Soviet republics, the region where communism once held unchallenged sway presents a picture of seething nationalisms, unstable democratic institutions and drastic economic recession. It seems a mockery of the hopes that were raised when Solidarity took power in Poland, East Germans swarmed over the Berlin Wall, the Ceausescus were executed in Romania and Mr Yeltsin defeated the 1991 putsch in Moscow.

Yet, as closer inspection reveals, it is unwise to generalise about so large and diverse an area. In Albania, until not long ago, famished people were dying in frenzied assaults on food warehouses; but there have never been shortages of pork and dumplings in the beer cellars of Prague. There are no conflicts in Poland or in Hungary comparable with the wars that have devastated Croatia, Bosnia, Georgia, Moldova, Azerbaijan and Tajikistan.

Even amid the miserable uniformity of the communist era, national differences were profound and encouraged by the ruling parties. The generals who imposed martial law in Poland in 1981 liked nothing better than to swaddle their ideology in the red-and-white national flag. Fawning courtiers in Bucharest hailed Nicolae Ceausescu as the latest and most inspirational in a long line of Romanian heroes dating back to a mystical Geto- Dacian age 2,000 years ago. Each of the 1989 revolutions was, in turn, unique: in Hungary, a voluntary abdication of power by the Communist party; in East Germany, a popular uprising sparked by the exodus of citizens abroad; in Bulgaria, an internal party coup against the regime of Todor Zhivkov.

Nor has the move from communism everywhere collapsed in failure. Next to the dole queues, soaring prices and ethnic rivalries, positive features stand out. In much of eastern Europe, a majority supports the Western values of constitutional government and a free enterprise economy. They talk of 'a return to Europe', implying a desire not only to enter the European Community but also to establish a level of civilisation and political maturity absent from recent history.

Except for incidents such as the miners' rampages through Bucharest in June 1990 and September 1991, and setting aside ethnically related troubles, political life has been free of violence. Governments respect human rights more fully than under communism, and free travel is permitted. The media, while sometimes under state pressure or influence, are less restricted. Free elections have been held, and the victory of former Communists in Poland and Lithuania could be interpreted not as a blow to reform but as the return to respectability of left- wing politics.

The chief exception to the positive trend is former Yugoslavia, whose civil wars still have the potential to spread down the Balkans into southern Serbia, Macedonia and Albania. But the international climate is not hostile to change. Three years ago, Poland was alarmed that Germany might not recognise the Oder-Neisse line as their common frontier; two years ago, all eastern Europe was worried about the rise of hard-line Soviet Communists. Now there is no Polish- German border dispute, and the Soviet state has disappeared, as have its old levers of control: the Warsaw Pact and the trade bloc Comecon.

A crucial contrast to the period between the world wars - eastern Europe's last attempt at democracy - is that, for countries such as Poland and the Czech Republic, neither Russia nor Germany is an enemy. Seen from Tallinn, Kiev or Tbilisi, however, the picture is different. Most former Soviet republics fear a return of Russian overlordship, and those with substantial Russian minorities feel vulnerable to subversion. The political defeat of Mr Yeltsin would deepen such fears because, while he is not averse to a little muscle- flexing on ethnic Russians' rights, he is widely seen as a force for moderation.

A serious problem is that the democratic institutions of eastern Europe and the former Soviet Union are not working as effectively as had been hoped. After overthrowing the Communists, Solidarity, Civic Forum and other mass movements split apart, leaving a chaotic and fractured political scene. Disputes between Czechs and Slovaks led to the dissolution of Czechoslovakia, against the wishes of the playwright president, Vaclav Havel. In Poland and Hungary, voter turn-outs in elections are exceptionally low, indicating apathy and scepticism about new political parties, most of which have precarious social bases.

Four years of collapsing living standards have made some voters susceptible to the lure of what might be called the 'anti- politician': men such as Stanislaw Tyminski, the emigre with a Canadian and Peruvian background who finished second in Poland's 1990 presidential election; Vladimir Zhirinovsky, the ultra-right demagogue who won 6 million votes in his contest with Mr Yeltsin; and Georges Ganchev, the emigre fencing champion who came third in Bulgaria's election.

The economic picture is not uniformly awful. Poland, Hungary, the Czech Republic and Estonia have relatively stable currencies. State monopolies have been dismantled and a new class of entrepreneurs has emerged. However, some of the latter, particularly in the former Soviet republics, seem more versed in the skills of the criminal underworld than in those of the Western business school, while elsewhere the public often perceives former communist managers who run privatised industries as a new nomenklatura.

The biggest social problem may be that the lower classes have borne the brunt of the transition from a command economy, but have too little hope of improving living standards. Unemployment and falls in real wages have condemned millions of people to an onerous existence. This makes them vulnerable to demagogy, either from the extreme nationalist right, which whips up anti-Jewish, anti- Gypsy and anti-foreigner hysteria, or from the ex-communist left. The working classes resent aggressive businessmen who appear to have become rich at their expense.

All the ingredients remain for prolonged class and ethnic conflicts in the former communist bloc. The status of Hungarians in Romania, Slovakia and Serbia, Albanians in Serbia and the former Yugoslav republic of Macedonia and Russians in Ukraine, Estonia and Moldova is unresolved.

Eastern Europe is anxious to be enfolded in the protective cloak of Nato but Mr Yeltsin, after telling the Poles that they were free to enter the Western alliance, said this week that Nato and Russia should jointly guarantee the region's security. Such a revival of Russian influence would be regarded with horror in eastern Europe.

On the other hand, Nato opposes extending to such a volatile region its doctrine that 'an attack on one is an attack on all'. West and East must work to find the right security formula, for without it more wars and instability lie ahead.